Management guru C. K. Prahalad in his book, The Fortune at the Bottom of the Pyramid stresses on the colossal collective purchasing power of bottom of the pyramid (BOP) consumers and how large private enterprises should focus on product innovation to cater to this segment of the population. And Godrej & Boyce has towed that exact line with its cost-effective refrigerator, Chotukool, which is all set for a nationwide launch in March. “We recognised the immense untapped buying power in the rural segment and decided to fill the void in the refrigerator market with our Chotukool offering,” says G Sunderraman, vice -president of corporate development, Godrej & Boyce.
And Godrej & Boyce’s strategy for inclusive growth was not to just offer them a product, but, to include the rural consumer to co-create their own product along with its engineers. This has helped them come up with features that is a perfect fit for rural life. Be it the top loading factor, low power consumption when compared to a regular refrigerator or the light weight, its features are tailor made to suit the lives of a typical rural Indian.
Chotukool functions without a compressor. The top loading cool box has a 43 litre capacity and can run on battery. The refrigerator weighs only 7.8 kgs and runs on a cooling chip with a temperature drop of upto 20 degrees. “Given the power shortage in the countryside, Chotukool uses high-end insulation to stay cool for hours without power,” says Sunderraman. “The operational cost is low as the power consumption is only 12 volts, half the power consumed by regular refrigerators,” he adds.
The pricing of Chotukool is what makes it a clear winner. At Rs. 3, 250, it costs almost 35 per cent less than the cheapest category of refrigerators available in the market today. “We realised that BOP customers are very brand conscious as well as price sensitive. Hence, it was imperative to keep the price of Chotukool at the lowest possible level to attract customer interest,” says Sunderraman.
The idea to target BOP consumers came up at ‘Innosight’, a workshop that Godrej & Boyce organised for its employees with Clayton M Christensen, professor, Harvard University, best known for his ideas on ‘disruptive innovation’. According to www.claytonchristensen.com, disruptive innovation is a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves ‘up market’, eventually displacing established competitors. An innovation that is disruptive allows a whole new population of consumers access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill. This latest innovation by Godrej & Boyce works on similar principles.
The company has involved the villagers not only in designing the product but also to take ownership for selling the product. Godrej has dropped the traditional model of a proprietary channel with a sales force and a distributor-dealer chain. It has resorted to an unorganised but effective distribution network by partnering with rural self-help groups, non-government organisations and micro-finance institutions to boost sales. They have involved village girls as sales persons to canvas for the benefits of Chotukool. “Educating BOP customers about the value of socially beneficial products posed some challenges,” says Sunderraman. The new distribution network relies on community testimonials and these in turn build patronage for Chotukool.
Prahalad’s work constantly emphasises this: the concept of inclusive growth gains momentum only if large corporations inculcate the three L’s as a strategic intent into their business plans – growth in living standards, lifestyle improvement and livelihood generation of the socially backward. Godrej’s accent is clearly on bettering the lives of the socially backward with innovation at all levels; design, technology, pricing and marketing. “We are looking at increasing the size of the rural wallet not by grabbing a share of the inherent market but by creating better purchasing power in the hands of the rural customer,” says Sunderraman. With less than one in every five rural Indian homes owning a refrigerator, Chotukool is in tune with Prahalad’s ideology that serving the poorest of the world is good for business.